Updated: Nov 18, 2022
I want to talk to you about something that’s probably the most important story that we’ve had since 2008. And I mentioned on my podcast last week, that things are starting to break, I talked about the Bank of England and talked about the British pound, I talked about the yen, things are starting to break a little bit. And this week, we had a major calamity in the in the pound and it all started with inflation. So, we’ve printed all this money for the last couple of years and we’ve driven up inflation. Well, the Fed and the central banks around the world, including the Bank of England, the Bank of Japan, and Brussels, you know, handling the euro, everybody’s just cranking, cranking the money printing up at the same time. And it’s caused all this inflation. Well, when it does that, and then all of a sudden, they realize, “Oh, my, we got inflation”, then they have to raise rates, or they think they have to raise rates. I’m not so sure about that. So, they’re raising rates so that we bring the economy down, and then when things start to go into a tailspin, then we get deflation, which is actually a bigger problem. So, the Bank of England realized how much inflation there was. And there’s a new prime minister called Liz Truss there. And so, she needs to come in and impress everybody that she’s doing a good job. She said, “You know, I ran on this platform that we’re going to lower taxes.” And she came in with this thing to lower taxes. Well, what did that do? That freak out all the bond markets. The bonds are owned by tons of pensions, the pensions in England own bond market, bonds from England. And so, the bond market actually got it just kind of dried up, right? Do you liquefy it? And so, what happens is when anything gets lack of liquidity, there becomes a run on that. And when there’s a run on it, people start to grab it, they sell it and so there was a plummeting of the bond market. Well, what happened was that Liz Truss said, “okay, after one day, she said, I’m not going to raise the rates, I’m not going to lower the rates on taxes, I’m just going to leave them the way they were.” And the Bank of England said, “you know, we’re going to do, we’re going to print more money, and we’re going to buy those bonds.” So, calm down, everybody, everything’s fine. We’ve got inflation, we’ve got a pension fund, liquidation problem, we’ve got Bank of Japan raising rates, and into an inflationary environment. And then now they’re going to say they’re going to lower rates. So, what they’re doing is they’re saying, “Don’t worry, we’re going to raise enough money printed out of thin air, and we’re going to buy those bonds.” Okay, what does that do? Well, that calms the bond market down for a little while, just a little while. The British pound, that’s what I’m trying to say the British pound went from, like 112, down to 103. And now it’s back to 111. So, it had this huge thing. Now, anytime you get a market that’s unsure about what’s going on, you get liquidity crisis, you get all kinds of manipulation. When you end up doing that, you create what’s called poor purchasing. And so, things go up and they go down, they go up, and they go down. And when they go up and down, that quickly, it starts to freak people out. And what they do, they pull their money to the side. And so we’re this close, with our first major central bank about to fail. Now, think about the repercussions in the world when our first major central bank and the central bank fails, right? If the Bank of England fails, it’s a contagion that will probably go to the Bank of Japan. It’s already happened in some really small countries. So, it’s starting to go from one country to the next. And if it happens, it’s going to happen in the US at some point. I don’t know when? Maybe we’re still the strong one in town. But it’s going to happen at some point. So, just calling your attention to it that you don’t need to know what’s going on in the world all the time. But you should have an idea of how it affects your finances. That’s what we do here on the wealth architect podcast, you should know what’s going on in the world, because it does affect your finances. And if we have a major crash in any central bank, a failure of a central bank where people just don’t even believe in the in the Bank of England’s money anymore, they don’t believe in the pound. And all of a sudden, they just sell all the pounds and the pound becomes this hyperinflationary thing and it becomes worthless, like so many other currencies have done in history. We’re in a load of trouble and the rest of the world has to come in and bail them out. And if they can’t bail them out, because their own currencies are weak, because they’ve been doing the wrong thing with currencies for the last several years. You can call it the last 12 years or you can call the last 100 years depends on what you want ever since the institution and fiat money. If all that starts to happen, we got a major worldwide calamity or major worldwide problem. I don’t know if that’s going to happen or not. I hope it doesn’t. But we’re starting to see the cracks in the system. And I’m just trying to keep you abreast of it. Because if you’re caught in it and you’re not prepared for it, it could take you down. I hope that helps you a little bit. And I hope at least this keeps you aware of what’s going on to the world.